Lawrence Berkeley Revises German Solar Cost Calculation

In a study supported by the Department of Energy’s SunShot program, the Lawrence Berkeley Lab has revised its assessment of why solar installations are cheaper in Germany than in the United States. It’s not because labor rates are lower; instead, standard practices mean fewer labor hours on each installation, with no permitting fees or sales taxes. In 2012, the lab finds that the average cost of a customer-owned PV system (under 10kW) in the United States was $6.21 per watt before incentives; that’s 80 percent higher than the average cost in Germany, $3.42. Hardware costs were nearly equal.

Here’s a summary of the report:

• Total non-hardware costs for residential PV in Germany are about $2.70/W lower than in the U.S.

• Customer acquisition costs average just $0.07/W in Germany, or roughly $0.62/W lower than in the U.S.

• Installation labor requirements reportedly average 39 hours for German systems, leading to $0.36/W lower costs than in the U.S.

• PII (permit, inspection, interconnection) processes require 5 hours of labor, on average, in Germany, with no permitting fee, resulting in PII costs roughly $0.21/W lower than in the U.S.

• German residential systems are exempt from sales/value-added tax, while U.S. systems are subject to an average sales tax of roughly $0.21/W (accounting for sales tax exemptions in many U.S. states)

• The remaining gap in soft costs between Germany in the U.S. (~$1.32/W) is associated with overhead, profit, and other residual soft costs not captured in the categories above.